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Posts: 159
2 weeks ago
What is the effect on the stock price when a firm repurchases its shares?
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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2 weeks ago
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There is a common misconception that the share price rises when a firm repurchases its shares due to a decrease in shares outstanding.  However, the firm value also declines, as cash is used to buy those shares.  Consequently, both firm value and number of shares decline leaving share price unchanged.
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